RELATION MANAGEMENT FOR CONFLICT REDUCTION IN INDUSTRIAL BUSINESS SECTORS

Chaweng Sawanglaptham¹⁺ --- Sakrapee Worawattanaparinya² --- Thanin Silpcharu³

^1,2,3Faculty of Business Administration, King Mongkut's University of Technology North Bangkok, Thailand.

Keywords:Structural equation model, Labor relations, Conflict management, Industrial business, Collaboration, Benefit.

ARTICLE HISTORY: Received:1 April 2022, Revised:20 May 2022, Accepted:13 June 2022, Published:30 June 2022

JEL Classification:J52, J54, M52, M54.

Contribution/Originality: This study is one of very few studies which have investigated the factors that affect the labor relations in the industrial business sector, thereby providing empirical evidence that is essential to management and government labor specialists who are responsible for minimizing conflicts in the company.

1. INTRODUCTION

Digital technologies, such as robotics, information and communication technologies, and artificial intelligence will transform the world of work. They improve labor productivity, lower transaction costs and reduce barriers to market entry. This will, in turn, accelerate innovation, possibly inducing a virtuous circle of economic opportunity, growth and prosperity. Technology also changes the types of skills that employers demand and the relationships between employers and workers. This risks causing disruption, posing a threat to those who are too slow or unable to adjust (World Bank, 2017). The fundamental tasks of labor relations are to provide workers with an effective voice in shaping their terms and conditions of employment, to support and enhance productivity and efficiency of employers and the overall company, and to provide equitable and efficient resolutions to workplace problems and disputes (Kochan, 2019). Afik, Haim, and Lahav (2019) suggested that unions must announce a labor conflict at least 15 days before a potential strike. This raises the question of whether advance notice affects the firm value, as it allows employees and employers to negotiate and reach an agreement prior to a strike. Soares and Leszek (2021) assumed that it is possible to apply mediation in labor conflicts. It is possible to conclude that the mediation in these types of conflict by providing a procedure with phases helps to reach a solution. There are many advantages to applying mediation to solve conflicts in everyday life, including labor disputes.

2. THEORETICAL BACKGROUND AND RESEARCH MODEL

Organizations in the industrial sector regularly have conflicts or demands from employees. Good labor relations management will help to reduce such conflicts. Therefore, this research examines how labor relations management guidelines can reduce conflicts in the industrial sector, and the following concepts have been compiled:

2.1. Conflict Management

Conflict in organizations affects the perceived behavior of the personnel in the organization. Management should focus on the cause of the conflict to reduce any harmful effects within the organization. Conflicts include disagreements between employers and employees regarding employment conditions, work days, hours, wages, benefits, and layoffs (Robbin & Judge, 2013). The major causes of conflicts are corporate communication, a redundant work structure, and differences in personal satisfaction. A study on the relationship between conflict management strategies and mediation outcomes found that conflict management strategies influenced the group's innovative efficiency. In the IT sector in the UAE, it was found that more innovations led to fewer conflicts (Alhassani & Bhaumik, 2019).

2.2. Communication

Internal communication is an essential tool when communicating with employees. Employees are considered as a group of internal stakeholders who are no less important than outsiders. Among the barriers and problems affecting the effectiveness of communication that will result in misunderstandings, it includes misinformation. bad listening habits, rumors, labor diversity differences in language usage styles between cultures (George & Jones, 1998).

2.3. Collaboration

Collaboration is a key feature that enables cooperation. Organizations should focus on its effectiveness of achieving goals, and performance that meets the satisfaction of the individual employees. Management must also acquire leadership that can create cooperation in the workplace to achieve the goals of the organization through quality and good morals (Barnard, 1958). Strategic management should be applied in highly competitive business situations to gain market share and high profits; this requires teamwork and the cooperation of all employees in the organization. The executives must build faith in employees, be fair in providing information, and treat all employees with respect (Obrom & Sakrapee, 2020).

2.4. Participation

Participation and the mood of individuals in a group situation is psychologically relevant. The result of this involvement was a stimulus for the achievement of the citizens' aims and a responsible involvement using federal social programs (Arnstein, 1969). The participation of personnel in an organization must be voluntary; willingness to cooperate and work collectively toward the goals of the organization is important. According to Abu-Rumman (2021) transformational leadership is positively correlated with employee engagement. Leaders must provide employees with the resources they need to carry out their work so that they can work efficiently. This also includes the availability of appropriate safety equipment in each work area (Balwant, Mohammed, & Singh, 2019).

2.5. Negotiation

Negotiation is an important tool in solving labor issues, such as low wages, long working hours, accidents at work, child labor, and unemployment, enabling employees to maintain their rights for better working conditions and social protection. This allows for effective, fair and equitable employment contracts between employers and employees. Employees and employers should have mutual benefits with minimal conflict (Caputo, Ayoko, Amoo, & Menke, 2019). A good working atmosphere has modern facilities and is safe to work in. This encourages employee loyalty, which will eventually yield sustained capital for the organization (Thitiya & Sakrapee, 2020).

2.6. Trust

Trust is confidence between two parties agreed upon through honest, sincere communication and having confidence in each other’s abilities. Trust consists of three components: potential trust, communication trust, and trust in commitments (Reina & Reina, 2009).

2.7. The Research Model

The conflict management model in an organization uses an integrated approach. This is because concept synthesis and collaboration are required to achieve the best solutions. However, for employees in the organization, the importance of trust, knowledge, competence and communication of the organization's executives is important, while the government agencies responsible for labor welfare will play a role in ensuring that the organization complies with relevant laws, such as paying minimum wage and offering fundamental access rights to public welfare (Ford & Gillian, 2018).

This study addresses the following seven hypotheses:

H1: Organization support offered to employees influences benefits.

The results of the study found that in order to give low-income groups access to a better standard of living, we must clearly classify low-income groups because it will affect the rules for obtaining such rights from the employees who work in the company. And entrepreneurs are more likely to employ people who are not entitled to basic living wages, such as marginalized workers (Wang, Chan, & Han, 2019).

H2: Organization support directly influences collaboration.

There is quite a lot of pressure in work environments due to poor volunteer management systems. There is no training in volunteer duties and volunteers are not treated equally. Therefore, the organization should train volunteers prior to starting work. The duties of each volunteer should be clearly defined, which will help to reduce the pressure on them (Aldamman et al., 2019).

H3: Organization support directly influences job characteristics.

Employees expect job support from their organization. If they feel supported, they’ll be happier in their role, but if they don't feel supported, they may leave to work in an organization that meets their expectations (Ahmad, 2017).

H4: Collaboration directly influences the working environment.

Professional nurses work hard but they do not receive fair compensation. They are forced to work longer than their regular hours and have little personal time as a result. They will only be able to cope with this situation for a certain length of time, and experienced, professional nurses eventually resign and look for work elsewhere. In order to reduce these problems, management should offer reasonable compensation. When cooperation between nurses and management exists, it will ensure a good working environment and atmosphere (Mahoner, 2020).

H5: Collaboration directly influences benefits.

An organization that is too strict will cause stress, which will lead to reduced employee efficiency. Organizations should offer some flexibility in order to give their personnel more freedom. This will reduce anxiety and will encourage cooperation, resulting in higher work efficiency. Welfare and other benefits will also be improved (Fergusson, Van Der Laan, Shallies, & Baird, 2019).

H6: Collaboration directly influences job characteristics.

In the case of refusal to accept new employees from other areas, even with knowledge and experience, they didn’t receive cooperation from local colleagues or recognition from entrepreneurs in the country where they work. This resulted in relatively low productivity (Matin, 2017). Entrepreneurs should provide opportunities for their employees, offer suggestions for cooperation, create job descriptions that are appropriately aligned with the workload, as well as provide additional training relevant to the job roles.

H7: The working environment directly influences job characteristics.

To reduce the shortage of nurses in rural areas of Orissa, India, the senior management of the public health agency has created incentives with the improvement of housing and nursing facilities (Behera, Behera, & Prutipinyo, 2020).

Figure 1 presents the research model adopted in this study.

3. METHODOLOGY

This research takes an inductive approach by using mixed methodology.

1. Qualitative research with in-depth interview techniques. There are nine experts split into in three groups, three entrepreneurs or business executives, three people in government sectors and related agencies, and three academic groups. For the purpose of this study, the interview guidelines contain five components: Benefits, Collaboration, Organization Support, Working Environment, and Job Characteristics.
2. Quantitative research was carried out using an assessment questionnaire, which was given to five experts to assess its quality by checking the questionnaire–objective correspondence index (IOC). It obtained a score between 0.80–1.00. After that, the questionnaire was used for testing. The analysis of discrimination, classified by each item, returned a value between 0.50–1.61, while the confidence of the questionnaire (Cronbach’s alpha coefficient) achieved a value of 0.99. Permission was obtained from the management of all companies involved, and a group of 600 employees and labor experts involved in the labor relations system took part. Approximately 58% of the participants were male (N = 348), while the rest were female (N = 252). Regarding years of service, 13% (N = 78) had served for less than five years, and 87% (N = 522) had served for more than five years. General data analysis includes descriptive statistics, reference statistics using the SPSS package, and structural equation modeling using the AMOS statistical analysis program. The criteria for assessing the conformity of the structural equation model consisted of four values​: CMIN–p > 0.05, CMIN/DF < 2, GFI > 0.90 and RMSEA < 0.08 (Arbuckle, 2016).
3. Qualitative research was employed with group conversation techniques to certify the model. The population used in this research consisted of 11 experts.

Relation Management for Conflict Reduction in the Industrial Sector	Management			Government Labor Specialists			Laborers
		SD.	Significance Level		SD.	Significance Level		SD.	Significance Level
Overall	4.32	0.21	High	4.32	0.21	High	4.43	0.24	High
1. Benefits	4.31	0.31	High	4.34	0.36	High	4.39	0.43	High
2. Collaboration	4.45	0.31	High	4.40	0.33	High	4.67	0.30	Very High
3. Organization Support	4.24	0.29	High	4.27	0.31	High	4.27	0.41	High
4. Working Environment	4.31	0.27	High	4.32	0.31	High	4.39	0.38	High
5. Job Characteristics	4.31	0.29	High	4.30	0.27	High	4.49	0.37	High

The results in Table 1 show that employees pay more attention to the labor relations system than management and government labor experts, which has a mean of 4.43 and is of great significance.
The results also found that management, government labor specialists, and laborers in the workplace all consider collaboration to be important as the scores are similar.

4. DATA ANALYSIS AND RESULTS

1. The analysis of the importance of relation management to reduce conflict in the industrial sector showed that the overall importance reported by laborers was 4.43, management was 4.32, and that of government labor specialists was 4.32. When considering each variable, management placed high importance on every variable with the highest value on collaboration (mean = 4.45), followed by working environment (mean = 4.31), job characteristics (mean = 4.31), benefits (mean = 4.31) and organization support (mean = 4.24). The government labor specialists also placed high importance on all five variables, with the highest value on collaboration (mean = 4.40), followed by benefits (mean = 4.34), working environment (mean = 4.32), job characteristics (mean = 4.30) and organization support (mean = 4.27). The laborers placed the highest importance on collaboration (mean = 4.67), then on job characteristics (mean = 4.49), followed by working environment (mean = 4.39), benefits (mean = 4.39) and organization support (mean = 4.27).
2. The results of the analysis of the importance of relation management for conflict reduction in the industrial sector between the five types of characteristics of the tripartite were statistically significant at the 0.05 level.
3. The results of the SEM evaluation before the adjustment showed that the chi-square probability level (CMIN-r) = 0.000, relative chi-square (CMIN\DF) = 2.210, goodness of fit index (GFI) = 0.718 do not pass the criteria of empirical data, and the root mean square error of approximation (RMSEA) = 0.045 passes the criteria of empirical data.
Figure 2 reveals that after the model improvement, the chi-square probability level (CMIN-r) = 0.051 > 0.05, relative chi-square (CMIN\DF) = 1.139 < 2, goodness of fit index (GFI) = 0.959 > 0.90 and the root mean square error of approximation (RMSEA) = 0.015 < 0.08. Therefore, it can be concluded that the five statistical values passed the criteria.
The results of the hypothesis testing to analyze causal relationship between variable for relation management for conflicts reduction in industrial sector revealed seven hypotheses as follows.

H1: Organization support has a direct influence on benefits, with a statistical significance of 0.001 and a factor loading of 0.45.
H2: Organization support has a direct influence on collaboration, with a statistical significance of 0.001 and a factor loading of 0.21.
H3: Organization support has a direct influence on job characteristics, with a statistical significance of 0.001 and a factor loading of 0.22.
H4: Collaboration has a direct influence on the working environment, with a statistical significance of 0.001 and a factor loading of 0.28.
H5: Collaboration has a direct influence on benefits, with a statistical significance of 0.01 and a factor loading of 0.17.
H6: Collaboration has a direct influence on job characteristics, with a statistical significance of 0.001 and a factor loading of 0.50.
H7: Working environment has a direct influence on job characteristics, with a statistical significance of 0.001 and a factor loading of 0.36.

Variable		Estimate Standardized Regression Weight		Squared Multiple Correlation (R 2)	P-value
Organization Support
Benefits		0.45		0.26	***
Collaboration		0.21		0.04	***
Job Characteristics		0.22		0.59	***
Collaboration
Working Environment	0.28		0.08			***
Benefits	0.17		0.26			0.003
Job Characteristics	0.50		0.59			***
Working Environment
Job Characteristics	0.36		0.59			***
Organization support
ORG5	0.59		0.35			***
ORG6	0.65		0.42			***
ORG7	0.66		0.44			***
ORG8	0.63		0.39			***
ORG15	0.54		0.29			***
ORG19	0.17		0.03			***
Collaboration
COL4	0.68		0.46			***
COL6	0.70		0.49			***
COL7	0.66		0.43			***
COL9	0.64		0.40			***
COL14	0.56		0.31			***
Working Environment
WOR3	0.51		0.26			***
WOR7	0.32		0.10			***
WOR15	0.58		0.33			***
WOR16	0.64		0.41			***
WOR18	0.59		0.35			***
Benefits
BEN6	0.48		0.23			***
BEN10	0.42		0.18			***
BEN13	0.55		0.30			***
BEN14	0.63		0.40			***
BEN19	0.47		0.22			***
Job Characteristics
JOB1	0.52		0.27			***
JOB3	0.57		0.32			***
JOB4	0.59		0.34			***
JOB5	0.53		0.29			***
JOB20	0.53		0.29			***

Note: *** denotes significance at p < 0.00.

Table 2 presents the structural equation model for relation management and conflict reduction in the industrial sector. After improvement, the model consisted of five latent variables and one exogenous latent variable, i.e., organization support, and four endogenous latent variables, i.e., benefits, collaboration, working environment and job characteristics.

Organization support consists of six observed variables arranged according to the factor loading, i.e. providing knowledgeable responsible people and experience in evaluating and inspecting machines (ORG7) has a factor loading of 0.66, providing an annual training plan (ORG6) has a factor loading of 0.65, providing new courses necessary to develop work skills (ORG8) has a factor loading of 0.39, inspection and maintenance of tools and machines every three months (ORG5) has a factor loading of 0.59, providing team building activities by external agencies every year (ORG15) has a factor loading of 0.54, and providing a comfortable and appropriate place of work for pregnant women (ORG19) has a factor loading of 0.46.

Collaboration consists of five observed variables arranged according to the factor loading, i.e. government officials provide knowledge and understanding regarding labor law (COL6) has a factor loading of 0.70, government officials help to resolve conflict (COL4) has a factor loading of 0.68, workers join the canteen committee for selecting shops (COL7) has a factor loading of 0.43, providing activities to promote collaboration improvement (COL9) has a factor loading of 0.64, allowing workers to communicate, for example, giving workers the opportunity to ask questions regarding their assigned tasks to ensure they have a clear understanding) (COL14) has a factor loading of 0.56.

Working environment consists of five observed variables arranged according to the factor loading, i.e. installing CCTV cameras in blind spots where workers may be harmed (WOR16) has a factor loading of 0.64, measure the loudness of the sound from the operation of the machines (WOR18) has a factor loading of 0.59, providing a sports ground as proposed by laborers (WOR15) has a factor loading of 0.33, providing an area to sit and relax during breaks (WOR3) has a factor loading of 0.51, and periodically checking the temperature in the operating room (WOR7) has a factor loading of 0.30.

Benefits consists of five observed variables arranged according to the factor loading, i.e. providing group insurance for workers (BEN14) has a factor loading of 0.63, providing transport for workers (BEN13) has a factor loading of 0.55, setting up payment terms and conditions (BEN6) has a factor loading of 0.48, the pension payment criteria are set according to working age (BEN19) has a factor loading of 0.47, and a policy has been announced regarding the work goals that will be taken into consideration for benefits (BEN6) has a factor loading of 0.42.

Job characteristics consists of five observed variables arranged according to the factor loading, i.e. assigned work is suitable for employees’ physical condition (JOB4) has a factor loading of 0.59, highly skilled employees can train new employees (JOB3) has a factor loading of 0.57, employees can choose how they work under professional standards (JOB5) has a factor loading of 0.53, preparing job details for employees to work efficiently (JOB20) has a factor loading of 0.53, and the workload that is assigned matches the skills and expertise of the employees (JOB1) has a factor loading of 0.52.

5. DISCUSSION

The results of the hypothesis testing, classified by tripartite characteristics, confirmed the importance of the elements of the labor relations management system in reducing conflict in the industrial sector as a whole. There was a statistically significant difference at the 0.05 level. Management in the workplace encourage cooperation within the organization to achieve efficiency by creating an environment that supports and promotes workers. Personnel at the supervisory level and workers are allowed to jointly present problems and solutions arising from the working environment and the nature of work that adversely affects their physical condition (Xiong & Wang, 2018). Compliance with labor law stipulates the responsibility of employers to have clear guidelines regarding fair treatment and to reduce exploitation in employment. Workers will focus on protecting their rights to work, for example, by negotiating with the organization to improve the working environment and negotiating claims to improve welfare in various fields (Fan, Dong, Hu, & Luo, 2018). Collaboration in the overview of the labor relations management system to reduce conflict in the industrial sector has a mean of 4.51, which is the component with the highest mean and shows that executives promote cooperation among the workers in the organization. Building cooperation among workers encourages positive behavior. Supervisors and workers must treat each other fairly and respectfully and help each other to solve problems both inside and outside of the workplace. Workers must be given the opportunity to present their opinions and grievances, whether positive or negative (Kmieciak, 2020). The COVID-19 pandemic in 2019 had a huge impact on industrial businesses. Many organizations adopted guidelines to prevent the spread of the virus, such as social distancing, permitting employees to work from home, placing hand sanitizer at various points in the workplace, requiring all personnel to wear masks at all times, and body temperature measurement. These measures require cooperation from all personnel in the organization. Management must create an understanding among personnel regarding the importance of cooperation in order to lead the organization through a crisis and avoid the use of coercion as much as possible to reduce conflict (Hou, Remøy, Jylhä, & Putte, 2020). This is in line with Prakash, Roy, and Charan (2019), who focused on promoting cooperation for collaboration through good governance and humane treatment.

6. CONCLUSION

The relation management consists of five variables which all are important for conflict reduction in the industrial sector.

Organization support: The management team should provide adequate machinery and equipment for work, and test and certify workers' skills and proficiency.

Collaboration: Laborers should cooperate with the organization's activities committee. All parties should have knowledge and understanding regarding the government’s labor laws.

Working environment: The management team could implement cleaning day activities where supervisors lead and set a good example of how to keep the workplace clean.

Benefits: The management team should clearly define the criteria for the payment of pensions who are planning to retire. All workers in the organization should be satisfied with the workload, and the salaries should be fair.

Job characteristics: Determine the overtime rate of the organization according to the law. Appropriately assign workers' decision-making powers as needed. Use language to write documents for job descriptions that are easy to understand.

Funding: This study received no specific financial support.

Competing Interests: The authors declare that they have no competing interests.

Authors’ Contributions: All authors contributed equally to the conception and design of the study.

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